Quiz #364

• 1. Money is often considered to be currency plus demand deposits. If there is more money in the economy its value always declines.
• False
• True
• 2. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.
• False
• True
• 3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.
• False
• True

Quiz #364 answers

• 1. Money is often considered to be currency plus demand deposits. If there is more money in the economy its value always declines.

Answer: False

• 2. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.

Answer: True

• 3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.

Answer: True